Ferguson Enterprises Inc. (FERG)

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Sell: 17,970.00p|Buy: 17,990.00p|Change: 30.00 (-0.17%)

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Ferguson Enterprises shares slip on guidance downgrades, lower profit

(Alliance News) - Ferguson Enterprises Inc on Tuesday said it remains confident in its markets over the medium term as it upped its dividend despite lower interim profit.

The Virginia-based heating and plumbing products distributor said pretax profit for the

six months ended January 31 fell 12% to USD994 million from USD1.12 billion the prior year.

Shares in Ferguson Enterprises were down 6.9% at 12,110.00 pence on Tuesday afternoon in London.

The weaker interim profit is owed to the combination of a slight increase in net sales paired with increased costs.

Net sales grew 1.8% to USD14.64 billion from USD14.38 billion, however, cost of sales rose 2.4% to USD10.26 billion from USD10.02 billion.

Further squeezing the bottom line was an equally large increase in selling, general and administrative expenses, growing 2.4% to USD3.13 billion from USD2.98 billion.

Chief Executive Kevin Murphy commented: "Our associates continued to execute well for our customers in the second quarter, generating continued market outperformance with a sequential step up in volume growth rates. We are navigating a unique time with continued subdued markets and persistent commodity price deflation."

Ferguson declared a quarterly dividend of USD0.83, reflecting a 5.1% uplift from USD0.79 the prior year.

The firm partially downgraded its financial 2025 guidance, reducing its adjusted operating margin expectations to between 8.3% and 8.8% from 9.0% to 9.5%.

It now expects capital expenditures to be in the region of USD325 million and USD375 million, down from between USD400 million and USD475 million.

It reaffirmed its remaining guidance of lower single digit growth in net sales, USD180 million to USD200 million interest expense and a 26% adjusted effective tax rate.

"We are reaffirming our full year revenue guidance of low single digit growth, but updating the expected full year adjusted operating margin range to 8.3% to 8.8%," said Murphy.

"While we have been disciplined in managing costs in relation to volume growth, we are taking additional steps to streamline the business to increase speed and efficiency to better serve our customers, positioning the organisation for future profitable growth.

"We remain confident in our markets over the medium-term and continue to balance investment in key strategic opportunities, leveraging multiyear tailwinds in both residential and non-residential markets as we support the complex project requirements of our specialist professional customers."

By Christopher Ward, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

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